The Music City Center has generated 8,751 overnight room stays in hotels since opening in May. / Dipti Vaidya / The Tennessean

Written by

Joey Garrison

The Tennessean

:

Butch Spyridon, president of the Nashville Convention and Visitors Corp.

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Metro soon may tack a “fee” onto many goods sold in downtown Nashville as a way to build a new fund to help recruit major conventions to Music City Center.

A proposal headed to the Metro Council Tuesday would authorize the city to impose a 0.25 percent fee — a quarter of a penny — on the sales price of services, retail, food, beer and other goods sold within Nashville’s Central Business Improvement District, which includes most of downtown.

Collections, estimated at around $1 million annually, would go toward a pool that would enable the Nashville Convention and Visitors Corp. to underwrite the rent that convention groups pay to use the center. The goal: lure coveted organizations to Nashville over competitor cities.

Rents for groups at the new Music City Center vary, often exceeding more than $200,000 a visit, depending on the size of the group.

Butch Spyridon, president of the CVC, which spearheaded the measure, said the idea is to “build a bit of a war chest” aimed only at conventions that generally would fill at least 2,000 hotel rooms and require more than one hotel.

“This is just one more weapon,” he said, adding that cities such as Chicago, Atlanta and New Orleans all have funds that allow them to use this incentive-based approach.

Sales tax in Davidson County is 9.25 cents on every dollar, below Tennessee’s cap of 9.75 cents. The council resolution calls the measure a “fee,” however, and several retail sales would be exempt. Those exemptions include: professional services, hotel lodging, tickets to sporting and other live events, and newspapers and other publications. Liquor sales also would be exempt, but not beer sales.

Mayor Karl Dean supports the proposal.

“Our tourism industry continues to be a great economic engine for our city, and we favor doing what we can to keep that momentum going,” said Bonna Johnson, press secretary for the mayor’s office, which introduced the bill for the CVC.

The resolution, up for a one-time vote, would go into effect immediately if approved, but the city would not begin collecting the money until six months from now.

The local push for the fee follows the passage of state legislation this spring that was spurred by the lobbying of Nashville’s CVC.

Months ago, a group of downtown business merchants, supportive of the new center and excited about the visitors it is projected to bring, helped initiate the conversation about the fee.

Brenda Sanderson, whose family owns Legends Corner, The Second Fiddle, The Stage on Broadway and Nashville Crossroads, said her Lower Broadway establishments would not be passing it onto customers. And she pointed out the fee equates to only 1 cent on every $4 beer purchase.

“We feel like one penny on every beer we sell, and allowing that to go forward into a fund to help promote downtown, is actually a very smart idea,” she said.

Some opposition

Not all council members are eager for the fee.

“We want it to be successful, and I will do everything I can, but I don’t know that I want more taxes,” Councilman Robert Duvall said.

Even before the $585 million center opened in May, collections of the city’s hotel and motel tax dollars — revenue used to pay off the center’s debt — had surpassed projections by wide margins.

The center is lagging behind what consultants had predicted, but officials say the center is still on pace to exceed those benchmarks.

To date, the center has generated 8,751 overnight room stays in hotels, according to the Nashville Convention Center Authority, producing a $26 million economic impact.

Councilwoman Emily Evans, a critic of the center’s financing, said she didn’t know how she would vote on the fee but called the underwriting of rent the “natural progression when you have such an oversupply of space.”

In addition to helping the city-owned Music City Center, revenues also could go toward conventions at the privately operated Gaylord Opryland Resort & Convention Center. The fee’s revenues couldn’t be used when Opryland and the new center are competing for the same business.

Spyridon said he expects to hear skeptics say the fee is a sign that the facility is struggling, but rejected such talk.

“My answer is: We’re being proactive,” he said. “We’re thinking forward. We’re looking at our competition and business has never been better.”